Growth Worries for Uber, AirBnB, and Behemoths of the Sharing Economy

Those who use short-term labor platforms such as Uber tend to be young, of low income, and living in the West

There's a reason we so often mention AirBnb and Uber in the same breath--they're the two of the most successful avatars of the much-lauded sharing economy.

But a new report from the JPMorgan Chase Institute splits companies such as Uber and AirBnB into two groups. The "labor platforms," such as Uber and TaskRabbit, help people find short-term work. The "capital platforms," such as AirBnB and eBay, help people rent or sell assets. And, the report says, the two types of companies play very different roles in the economy, and in the lives of those who work and sell for them.

The study's findings are part of a larger effort to learn about income volatility, in which the researchers analyzed the anonymized bank accounts of 1 million people, including 260,000 who have participated in what the study refers to as the platform economy.

The study's main finding is that people who work via companies such as Uber and TaskRabbit are using those services to patch together more income when other sources look like they're running dry. They're not earning "extra" income. It's true that Uber drivers are more likely to be between jobs than the rest of the population. It's also more likely that they are already employed elsewhere, but that the hours from that gig have taken a temporary slide. To fill the gap, these people turn to Uber, TaskRabbit, and other vehicles for short-term work, which, on average, provide 15 percent of their income, compensating for what would otherwise be a 14 percent drop.

AirBnB hosts, not surprisingly, tend to have more stable incomes than the Uber drivers. And while AirBnB likes to make much of the fact that its service is helping middle-class people stay in their homes, the study finds that in fact, AirBnB hosts are renting out their properties in order to gain supplemental income, not to make up for drops. These platforms, on average, give participants a seven percent bump in earnings.

The study also found that people who rent their houses on AirBnB or sell household goods on eBay are about as likely to be male as female. But on the labor platforms, 67 percent of workers are men. Those using the capital platforms also tend to be wealthier, with median monthly incomes of $3,218. People using labor platforms had median monthly incomes of $2,514 and tended to be young and living in Western states. They were also most likely to be vulnerable to income volatility, experiencing on average a more than 30 percent month-to-month change in total income.

Growth in the "Sharing" Economy Slows

The data used in the study goes back three years, so the researchers were also able to look at how people use these platforms over time. That view provides a caveat for the entrepreneurs behind both gig economy companies such as Uber and the capital platforms such as AirBnB. Over time, the people who use those platforms do not appear to be becoming more active on them or more loyal to them. Instead, the growth in both of these types of companies seems to depend almost entirely on new people being drawn in--more people renting their homes for the first time, more people becoming new Uber drivers.

So the frequency with which someone rents out their space on AirBnB, for example, does not rise notably the longer they're an AirBnB host. Ditto for Uber drivers and others who use similar services to find short-term work: The amount of money they make with Uber doesn't increase with time. As a percentage of income, it stays steady. It's only for about a quarter of these people that such short-term work makes up 75 percent or more of their income.

Given the steady growth of companies such as Uber and AirBnB, it may seem that they can keep on picking up new workers pretty much forever before they have to worry about slowing growth. But the JPMorgan Chase study shows that for companies in this space, growth has slowed significantly in the most recent year. If this trend continues, even the largest companies in the gig economy might have to start taking a different approach to their workers.